Article: There’s a new method to measure job creation in the economy

Employee Relations

There’s a new method to measure job creation in the economy

Last week the government announced that jobs created in the non-farm informal sector would also be included in the employment growth figures. Read more about this change in methodology and its impact.
There’s a new method to measure job creation in the economy

Last week the government made a significant and much talked-about change in the way it measures job creation in the economy. According to news reports, the government has asked the Labour Bureau to keep a count of the jobs created in establishments deploying less than ten people. This decision to include jobs created in the non-farm informal sector was taken due lack of timely and holistic employment and job data in the country.

Let us take a look at what this change in methodology means and what is its likely impact? 

What has changed?

B.N. Nanda, senior labor, and employment adviser at the labor ministry was quoted saying, “Last week it was decided to count jobs growth in establishments having less than ten employees... The move will give a comprehensive picture of the job scenario in the country and may help settle the jobs growth debate in the country.” The base for the new data will be the 2013-14 economic census. 

It is pertinent to note that in 2015 as well when data suggested that job creation was touching new lows, the government had altered the methodology of data collection. Back then, the change meant including service sectors like education, health and restaurants to the eight key manufacturing sectors for data collection, the GDP, and employment growth; both managed to register impressive results. This move was however met with skepticism globally and nationally. 

What will be the impact?

The move is aimed at gathering reliable and comprehensive data regarding employment and job creation in the economy. Collection of data for an economy like India is not an easy task, and even the most recent data available is usually a few years old apart from the risk of being incomplete. It is a well-documented that an overwhelming majority of the workforce is employed in the informal sector, but data collection has largely been restricted to the formal sector.

In the future, one can expect more comprehensive and reliable data from the Labour Ministry. Not only will this help the government formulate effective and inclusive policies, but will also help establish the challenges and complexities of the informal sector and workforce in India. It can also pave the way for the formalization of employee benefits and social security in the economy. 

Why is this move significant? 

With the data collected using the new method to be made public by the end of this year or early 2019, the writing is on the wall. The government has been under fire from various sectors for failing to keep its promise of adequate job creation; the move is likely to provide a new perspective to the debate. The latest data suggests that the July-September quarter witnessed an increase of 136,000 jobs, as against just 64,000 jobs in April-June 2017. These numbers are a minuscule fraction of the millions of jobs that were promised by the government during the 2014 election campaign. 

This change could spark a new debate as the new and old methodologies might even depict radically different results. Regardless of the motivation, one cannot deny that an economy needs to base its policies on objective data. Any step to better the process of data collection is welcome, for it will widen the ambit of how the quintessential worker in the economy is viewed. There is a very real opportunity to study, and eventually better, employment creation in the informal sector of the country and make economic policies inclusive by including the informal workforce in the formal narrative. One hopes that the same is accomplished, regardless of who wields political power. 


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Topics: Employee Relations, #Jobs

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